Troy Clarke, Navistar International’s chief
executive officer, has bitten the bullet and ordered the closure of the
Huntsville plant of Navistar Diesel of Alabama LLC with the loss of 280 jobs.
Production of the plant will be moved to Navistar’s Melrose Park
facility which will add about 75 jobs.
The Melrose Park plant, in
Chicago, Illinois, according to Navistar, makes a variety of diesel engines
from 6 litres to 9 litres, namely the MaxxForce DT (previously the DT466),
MaxxForce 9 and MaxxForce 10 engines. The facility has a combined manufacturing
and office floor area of 1.5 million square feet.
Clarke has said last year
that he was in the process of reviewing engine production so closure of one or
more plants has been on the cards since then.
In an interview with The
Wall Street Journal on 20 February 2014 Clarke is reported as saying:
“We are not going out of the engine business. We just have too much
manufacturing capacity at this point.”
Containing costs has been
Clarke’s priority since taking the helm at the troubled US diesel engine and
truck maker from Daniel Ustian in August 2012, as he attempts to steer a new
path for the leviathan and restore profits.
As part of this strategy,
Clarke is reviewing Navistar’s engine lines for mid-range trucks and could
discontinue some low-volume lines, possibly shrinking further the company’s
manufacturing footprint.
The latest moves have to be
viewed against the backdrop of Navistar’s increasing reliance on engines from
Cummins Inc. In January, for example, IC Bus, part of Navistar, began shipping
school buses powered by Cummins ISB 6.7-litre diesel engines.
Navistar will continue to
make engines at a second plant in Huntsville, namely Navistar Big Bore Diesels
LLC. This plant, sited at the Jetplex Industrial Park makes the MAN-derived 10.5-litre MaxxForce
11 and 12.4-litre MaxxForce 13 “big bore” engines for Class 8 truck
applications, though Navistar makes little reference to the MaxxForce 11. This facility is more compact than the other plant in Huntsville,
with 300,000 square feet of production space.
Navistar also cites the plant
as making the MaxxForce 15 “big bore” engine.
However, the Caterpillar-derived C15 15-litre MaxxForce was
stillborn. Navistar is now buying 15-litre ISX engines from Cummins by way of
substitution.
The plant of Navistar
Diesel of Alabama LLC now scheduled for closure covers an area of
700,000 square feet of offices and production space and is located also on the
Jetplex Industrial Park. It builds MaxxForce 5 through to MaxxForce 10 engines.
A Navistar website also notes that Huntsville produces “vee engines, MaxxForce
5, MaxxForce 7 and 6.4-litre PowerStroke engines”, though not all these
models remain in production.
It will be recalled that
Navistar also has a facility at Indianapolis, Indiana where, until
2009, it had another major engine plant, building V8 PowerStroke diesels,
primarily for use in Ford F-Series heavy-duty pickups.
When Ford abruptly cancelled
the contract in 2009 in favour of building its own 6.7-litre diesel in-house
at its Chihuahua Engine Plant, Mexico, the Indianapolis operation was rebranded
by the company as Pure Power Technologies.
The business comprises a
foundry which has capacity to produce 250,000 tons a year, including Compacted
Graphite Iron (CGI) for “blocks, heads and other parts including housings,
front covers and much more”. There is another Navistar foundry in
Waukesha, Wisconsin - the birthplace of Orson Welles (1915-1985).
In 2011, Navistar announced
a five-year plan to revamp the Indianapolis plant as part of a strategy to make
Pure Power Technologies “a world-class supplier of engine components”.
In January 2012, Foundry
Management & Technology reported the foundry as “producing diesel
engine blocks and cylinder heads for cars and trucks” in CGI using SinterCast
process control technology.
Pure Power Technologies also
makes fuel injection equipment (from Siemens); fuel injection equipment from businesses
in Columbia and Blythewood, South Carolina, that it acquired from Continental
AG; aftertreatment equipment (from Amminex) and emissions control business
(from Holley).
Clarke expects to trim
$22 million a year from Navistar’s cost base as a result of his latest moves.
This is not much in the great scheme of things so no doubt he will cast his eyes on other
activities around the world.
On 20 December 2013, Navistar announced fourth quarter
results of a net loss of $154 million on revenue of $2.8 billion. The company
finished the year with “structural cost savings” of $330 million.
Prior to problems with its
engine business, largely the result of poor management strategy in the past by
Ustian, the company led in medium duty trucks with a share of about 30 per
cent. Its share of the heavy duty truck business allowed it to hold third spot
behind Daimler’s Freightliner unit and Paccar Inc.
Meanwhile, Navistar seemingly
has refused to deny last month’s Bloomberg
report that it is looking to dispose of the MWM engine manufacturing
business in Brazil, which it acquired from Klockner-Humboldt-Deutz as recently
as 2005.
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